INSUBCONTINENT EXCLUSIVE:
Additionally, the regulator has asked trading members to report their exposure under MTF by 6:00 PM on T+1 day
| Photo: Shutterstock2 min read Last Updated Sep 11 2024 | 7:28 PM IST
To promote ease of doing business, markets regulator Sebi on
Wednesday allowed securities funded through cash collateral to be considered as maintenance margin for margin trading facility (MTF).
The
move will also help alleviate the burden of additional collateral towards the maintenance margin for the margin trading facility.
The
development took place after the Securities and Exchange Board of India (Sebi) received representations from market participants through the
Industry Standards Forum (ISF) to relax the requirement pertaining to the margin trading facility.
In a circular, Sebi said stocks or
units of equity exchange-traded fund (ETFs) deposited as collateral with the brokers and those purchased using margin trading must be kept
the client in the form of margin for availing margin trading facility and the trading member has given the said cash collateral to the
Clearing Corporation (CC) towards settlement obligation of the said client, then the same can be considered as maintenance margin," Sebi
said.
If a broker collects cash collateral from a client and uses it to meet settlement obligations with the Clearing Corporation the
resulting securities received from CC can be considered as maintenance margin
These securities must be pledged in favour of the broker.
Sebi said if funded stocks are used as maintenance margin based on cash
collateral provided by the client, the funded stocks must be from Group 1 securities
The margin for these stocks will be Value at Risk (VaR) plus five times the Extreme Loss Margin, irrespective of whether they are available
in the Futures - Options (F-O) segment.
Additionally, the regulator has asked trading members to report their exposure under MTF by 6:00
PM on T+1 day (the day after the trade date).(Only the headline and picture of this report may have been reworked by the Business Standard
staff; the rest of the content is auto-generated from a syndicated feed.)First Published: Sep 11 2024 | 7:28 PMIST
